Guaranteed Rental Yield

[carbuncle]

Hi bros/sis

Have seen many projects (mostly large developers) that promise guaranteed rental yield of x%. My question to you is, do/has any of you owned such a condo and do they actually keep to the promise if you could not rent out, did not rent out or managed only to rent out below the x%?

How does this work?

[DKSG]

Hi bros/sis

Have seen many projects (mostly large developers) that promise guaranteed rental yield of x%. My question to you is, do/has any of you owned such a condo and do they actually keep to the promise if you could not rent out, did not rent out or managed only to rent out below the x%?

How does this work?

Wah! U very accurate man!
I just went to one this afternoon!

Geh-lend-dee 5%.

Some of these developers merely rent from you at 5% then sub-rent it out. Others allow you to rent out yourself and claim the difference. Developers will goo dreputatiojn usually will stand by their promise. No point hurt their reputation because of a few thousand dollars.

DKSG

[carbuncle]

So really no catchz? Geh len teed for 5 yrs means just that? Wow

[taggy]

So really no catchz? Geh len teed for 5 yrs means just that? Wow

Gurrantee 5yrs, so long? Isn't this like no need worry of installment for the next 5yr... Which project huh, me long time no go show flat...

[dtrax]

I think everything got black n white?

[phantom_opera]

what if u decide to move in to haolian??

[dtrax]

what if u decide to move in to haolian??

fwah that will be damn gl

[newbie11]

http://www.castlewoodgroup.com/#!investments

I considered this recently. 5% fixed for 8 years or 5% fixed 2 years + remaining 6 years variable. Exit by 2020 where they have signed agreement with CBRE to sell it and distribute the profit.

Another exit option is short term 4 years (2016), where capital is guaranteed and yield is 5% too.

investment starts from sgd60k.

they will throw in free phuket recce trip for 2 too.

[newbie11]

Wah! U very accurate man!
I just went to one this afternoon!

Geh-lend-dee 5%.

Some of these developers merely rent from you at 5% then sub-rent it out. Others allow you to rent out yourself and claim the difference. Developers will goo dreputatiojn usually will stand by their promise. No point hurt their reputation because of a few thousand dollars.

DKSG

paterson suites?

[bargain hunter]

Recently, Bt Semb sold $6m units geh lend tee 5% yield for 4 years or about 25k a month. alternatively, home occupiers can opt for a 10% up front discount (calculations show that its the same thing lah, 10% discount depending on whether u buy to rent or to stay). in the end, most of units were sold to owner occupiers who opted for a 10% discount or setting a new record low psf of 2500psf for many of the units (several caveats are already lodged). that's good value for buyers.

on the other hand, far east tries to sell their leftover units, also with 5% geh lend tee yield, but for e.g. the clift, they jack up the price, mkt price 2200psf, they sell at 2700psf, then geh lend tee u 5%. that is NOT good value for buyers.

[Regulators]

it is like developers absorbing stamp duty, which is nonsense. I went to a showflat in serangoon that day and i asked the agent where is the stamp duty absorption when those subjected to absd and those not subjected to absd is being sold the units at the same price? for example, if the buyer not subjected to absd is sold a unit for $800k, he just pays 3% stamp duty. For another singapore buyer subjected to absd, he is also sold a unit at $800k and has to pay 6% (3% + 3%). I told the agent this is a gimmick and he agreed with me. Developers jack up the prices by a couple of hundred psf and tell you they absorb absd which is nonsense of course. I hope the gahmen won't be stupid enuf to think these developers are really absorbing absd

[Arcachon]

it is like developers absorbing stamp duty, which is nonsense. I went to a showflat in serangoon that day and i asked the agent where is the stamp duty absorption when those subjected to absd and those not subjected to absd is being sold the units at the same price? for example, if the buyer not subjected to absd is sold a unit for $800k, he just pays 3% stamp duty. For another singapore buyer subjected to absd, he is also sold a unit at $800k and has to pay 6% (3% + 3%). I told the agent this is a gimmick and he agreed with me. Developers jack up the prices by a couple of hundred psf and tell you they absorb absd which is nonsense of course. I hope the gahmen won't be stupid enuf to think these developers are really absorbing absd

That is why no CM6.

Everyone know the developer did not absorb stamp duty.

Buyer happy thinking developer did give,
Developer happy because buyer think they give
and Gov. happy because everyone happy.

I still can remember paying 20% for my SB and took DPS. Feeling happy until I found out I pay 3 % more for DPS. Then years later found out I only need to pay 5 %.

After TOP saw agent carry a bunch of keys showing tenants, was told one guy brought 18 units during launch.

Launch price for Southbank in June 2006 2 Bedroom is $535,000.

5% is $26,750.

[Wild Falcon]

Paterson Suites? Notice it manages to move some units after the 5% guranteed yields. But u can be sure all buyers are investor type and not owner occupier. I guess developer didn't want to lower the price, so may
lugi" some money in the rental yield which is better than lowering price. But it also indirectly tells u even the developer knows its overvalued and not supported by fundamentals.

[M_Q]

http://www.castlewoodgroup.com/#!investments

I considered this recently. 5% fixed for 8 years or 5% fixed 2 years + remaining 6 years variable. Exit by 2020 where they have signed agreement with CBRE to sell it and distribute the profit.

Another exit option is short term 4 years (2016), where capital is guaranteed and yield is 5% too.

investment starts from sgd60k.

they will throw in free phuket recce trip for 2 too.

This sounds interesting.. saw the pictures of the resort.. looks AWESOME! Is there any downside to such investments?

[rattydrama]

interesting read. those who read market, smell a deal, punch the calculator, bring out cheque book and sign the check is the winner.

That is why no CM6.

Everyone know the developer did not absorb stamp duty.

Buyer happy thinking developer did give,
Developer happy because buyer think they give
and Gov. happy because everyone happy.

I still can remember paying 20% for my SB and took DPS. Feeling happy until I found out I pay 3 % more for DPS. Then years later found out I only need to pay 5 %.

After TOP saw agent carry a bunch of keys showing tenants, was told one guy brought 18 units during launch.

Launch price for Southbank in June 2006 2 Bedroom is $535,000.

5% is $26,750.

[newbie11]

This sounds interesting.. saw the pictures of the resort.. looks AWESOME! Is there any downside to such investments?

what if CBRE failed to sell at 2020 or sell at low price? I don't like things not within my control.

[bargain hunter]

the advertisement last weekend said 5% guarantee for 2 years when previously, the newspaper reported 4 years, not sure why, maybe moved many units already.

they already lowered the price. many caveats were lodged for paterson suites at ura's website last friday for may 2012. 14 caveats at 2500 or 2501psf vs 1 at 2829psf. by "owner occupier" i meant they did not take up the rental guarantee (which works out to be the same anyway). hence the 2500 (10% discounted price). they may subsequently rent out their units at half the guaranteed amount, which is the actual market rental rate at around 12k.

Paterson Suites? Notice it manages to move some units after the 5% guranteed yields. But u can be sure all buyers are investor type and not owner occupier. I guess developer didn't want to lower the price, so may
lugi" some money in the rental yield which is better than lowering price. But it also indirectly tells u even the developer knows its overvalued and not supported by fundamentals.

[EBD]

So really no catchz? Geh len teed for 5 yrs means just that? Wow

I severely doubt they will cover 5 yrs.

Anyhow - this is all a trick of financial engineering & once that period is over - good luck to you finding a sucker to rent out at the 5% yield mark.


Let's say realistic yield is 3%. The developer will basically top up the remaining 2% from their own pocket.

They will recoup this 2% by loading the sale price higher to cover all this back and probably more.

One morning you then wake up to realise you just got suckered.